Back in June of last year, IHS iSuppli reported that Apple had become the world's largest buyer of semiconductors in 2010, jumping past HP and Samsung to top the list with $17.5 billion in spending. Apple's lead was expected to grow in 2011 on continued strength of the iPhone, iPad, and MacBook Air, all of which contain substantial NAND flash memory, which has become a primary driver of semiconductor markets due to the booming mobile device landscape.
Research firm Gartner is out today with a new report that appears to utilize a somewhat different methodology in calculating semiconductor expenditures but which now comes to the same conclusion as IHS Suppli's earlier report. According to Gartner, Apple became the world's largest semiconductor customer in 2011 as measured by total silicon content in all products designed by Apple and its competitors, known as Design TAM.
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Gartner pegs Apple's year-over-year growth for 2011 at 34.6%, easily topping the growth of other top semiconductor customers and allowing it to leapfrog Samsung and a sliding HP for the top spot in the rankings. According to the report, semiconductor purchases for Apple's products came in at $17.3 billion in 2011, ahead of Samsung's $16.7 billion and HP's $16.6 billion purchases.
iSuppli's report from last year highlighted the vast differences in Apple's and HP's markets, with Apple's semiconductor usage being driven by mobile devices and HP's by traditional computer products. Gartner notes that mobile devices and solid-state drives are indeed now the major drivers of semiconductor usage.
"The major growth drivers in 2011 were smartphones, media tablets and solid-state drives (SSDs)," said Masatsune Yamaji, principal research analyst at Gartner. "Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand.
Gartner distinguishes Design TAM from Purchasing TAM, which would attribute to a given company only the amount actually purchased by the company. As an example of the difference between the two metrics, semiconductors purchased by a third-party manufacturing partner would generally count toward the primary company's Design TAM but not its Purchasing TAM.
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While I own a few shares of Apple and own Apple products I have mixed feelings about the huge profit margin on their products. And A4/A5 isn't exactly commodity parts as Samsung is the exclusive maker.AAPL has succeeded in separating the high-profit areas of consumer electronics from the commodity parts. Samsung has not -- while they sell consumer electronics, the lion's share of their numbers come through commodity parts. And many of Samsung's consumer electronics (e.g., smartphones) are using commodity operating systems.
That is part of why Apple's market capitalization is far higher than Samsung's.
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The investment hasn't panned out -- yet. It's way to early to judge the value of the investment. All we can really report at this point is that AAPL is willing to use their accumulated cash on hand and make big bets.
No what's really amazing is Samsung at one point (per quarter or per year not sure) made more $$$ than top 9 Japanese electronics makers (including sony) combined.Nothing is a certainty in the marketplace. Who would have bet 5 years ago that Samsung Electronics would get their lunch handed to them -- by AAPL? :D
I can't wait to hear the FY 2012 Q1 results later today!
Apple pays vendors to expand manufacturing capacity (which you call investment) while Samsung expands its own manufacturing (which is investment imo).
The story of how Apple makes more profit with higher market capitalization should be tempered down with what Samsung deals with.
Profit:
Samsung builds own factories, trains its workers, pays for their salary (not slave wage of course), and does most of this in S Korea. What does Apple do? Of course taking the route with LOWEST possible cost and passing on the cost to Foxconn. Now which would you prefer to see for your nation?
Market Capitalization:
Big deal is made about high market capitalization of Apple. You know a lot of that has to do with the extra media coverage. NOT a day goes by without some US newspaper/magazine/blog covering something about Apple. That drives people to look into and buy stocks of Apple. That's not bad in itself but that's a fact.
Samsung is at real disadvantage as they are not officially traded in US and it's not an American firm. But let's assume Samsung were an American company and I bet it would have just as good if not higher market capitalization compared to Apple. What company has a shipyard that builds half-billion dollar floating oil platforms? What company makes smartphones that are just as good as iPhone WHILE also making the core parts like cpu/display/ram.
Yes Apple has big profit and high market capitalization that you say Samsung can't match but look in more and it's not all what it seems.
Apple is the #1 semiconductor customer, and they have started moving their semiconductor purchases away from Samsung (https://www.macrumors.com/2011/09/21/apple-diversifying-memory-suppliers-too-moving-away-from-samsung/). That's gotta hurt Samsung.
Apple accounts for just 5% of Samsung revenue and they have a lot more ways to hurt Apple than Apple do.
I remember when we used to use their cellphones.
eg. adobe laughing at the fact that flash was bad for mobile devices. A year later they say no more development to flash on mobile devices!! They completely changed their attitude toward it. If only they listened to Apple from the beginning.
eg. Ballmer, calling the iPad an oversized iPod toy that won't sell. First day it earned more than Ballmer can count to. Three years later it is the most selling product in Apple and rises them to the top.
eg. Samsung... oh wait I shouldn't go there. Too many Apple haters here :P
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"We" are not any close to world domination than we were before - I think it's safe to assune that neither you nor anybody else here owns a significant share of Apple or even works for the company. Just owning one of their toys doesn't count.
Besides, when you look at those numbers, very obviously the group naned "Others" very clearly owns the place...
even if Apple was dominating. That is not Apple's fault. It is all the competitors not trying hard enough to sway consumers back to them. If I am not mistaken 10 years ago the computer industry was much more dominent to Windows than it is now. It is much more evened out now imo.
My point is having all the $$$ in the world doesn't guarantee you can pick and choose parts supplier whenever you feel like it.
The investment hasn't panned out -- yet. It's way to early to judge the value of the investment. All we can really report at this point is that AAPL is willing to use their accumulated cash on hand and make big bets.
Nothing is a certainty in the marketplace. Who would have bet 5 years ago that Samsung Electronics would get their lunch handed to them -- by AAPL? :D
I can't wait to hear the FY 2012 Q1 results later today!
this just illustrates to me that apple needs to start their own plants for making semiconductors and other pieces of their products. there are added costs to buying from someone else, but keeping it an in-house thing should help reduce costs which we could only hope would eventually be passed onto the consumers, but probably not.
Not necessarily. Moving things in house isn't always a cheaper option. Which is why these things get outsourced in the first place.